2 New Papers by Boettke, Coyne, and Leeson

Pete, Chris, and I have two new papers of potential interest. Links and abstracts below:

"Saving Government Failure Theory from Itself: Recasting Political Economy from an Austrian Perspective," forthcoming in Constitutional Political Economy.

The economic approach to politics revolutionized the way scholars in economics and political science approached the study of political decision-making by introducing the possibility of government failure. However, the persistent and consistent application of neoclassical models of economics also seemed to suggest that once the full costs were accounted for, this failure was an illusion. This paper counters these arguments associated with George Stigler, Gary Becker and more recently Donald Wittman, at the core of the economic theory that underlies their approach. In contrast, we develop an alternative model of political economy grounded in the Austrian conception of the dynamic market process.

"Institutional Stickiness and the New Development Economics," forthcoming in American Journal of Economics and Sociology.

Research examining the importance of path dependence and culture for institutions and development tells us ‘history matters,’ but not how history matters. To provide this missing ‘how,’ we provide a framework for understanding institutional ‘stickiness’ based on the Regression Theorem. The Regression Theorem maintains that the stickiness, and therefore likely success, of any proposed institutional change is a function of that institution’s status in relationship to indigenous agents in the previous time period. This framework for analyzing institutional stickiness creates the core of what we call the New Development Economics. Historical cases of post-war reconstruction and transition efforts provide evidence for our claim.

Comments are open.

Comments

[TGGP]

I was surprised there was no mention of Bryan Caplan. He rather clearly rejects the Austrian view in favor of the neoclassical one and asserts contra Wittman that voters are very ignorant and irrational and that as a result political failure in democracy is rampant.

[Anon]

On the second paper, there is a typo on page four the last sentence of the paragraph beginning "We provide..." The sentence is "This framework for analyzing institutional
stickiness is at the core of what call the New Development Economics." It is missing a word after 'what'

[Econometron]

Great papers!

I especially like the one about "New Development Economics."

Can you recommend any Austrian papers on inequality (or distributional justice)?

[Hunden]

In their zeal to draw the long-term equilibrium consequences of political redistribution, the Chicago people may want to examine whether it is possible to receive any amount of wealth from the political process without having to incur costs to the same amount due to "perfect competition" from other would-be receivers of stolen goods.
They would then discover that all redistributed wealth must be dissipated through the efforts necessary to obtain it.
Some "efficiency".

[Sandy Ikeda]

You've got my argument wrong. Regarding your discussion on p.23 of my analysis of public choice versus Austrian political economy: I do NOT characterize ALL public choice as grounded in the perfect-knowledge assumption. What I say is that the perfect-knowledge assumption that enables political economists to infer intentions from outcomes is what is "uniquely" public choice. (Mises and Hayek after all also appreciated the distinction between announced and intended outcomes a la public choice, but they chose to emphasize knowledge problems.) Thus I do not claim that ALL public choice makes this strong knowledge assumption. That's why in the article you cite (Ikeda 2003) I explicitly distinguish Chicago from Virginia PC. The latter comes closer to the "uniquely" Austrian component of political economy, which is based on radical, rather than rational, ignorance.

After all, the answer to the question in the title of that article is "PC and Austrian PE ARE compatible, but only if Virginia PCers (especially Buchanan) are willing to jetison the strong neoclassical-utility-maximization framework they still cling to so that their rhetoric becomes consistent with their professed method.